ECB’s Moulin says the current increase in long-term bond yields reflects higher supply and increased inflation expectations

The framing here is a classic official read of long-end repricing, and the decomposition matters more than the level: officials attributing higher long yields to supply and inflation expectations are implicitly saying the move is not a tightening of financial conditions the central bank needs to lean against, which in past episodes has been the rhetorical step before tolerating further curve steepening. The supply leg points to sovereign issuance and deficit dynamics in the core and semi-core, where widening deficits have historically shown up first in term premium and in swap spreads rather than in the policy-rate leg; the inflation-expectations leg points to breakevens, and the distinction between the two channels is what separates a growth-and-supply bear steepener from a credibility problem. Pairing that diagnosis with a defence of the recent hike and a call for fiscal consolidation follows a familiar ECB pattern: monetary officials shift the burden of duration supply onto finance ministries, and the transmission runs through issuance calendars and BTP-style periphery spreads if deficits are not addressed. Comments of this kind from a single governing council voice tend to move the long end only modestly on their own; what has historically mattered is whether the supply-and-term-premium framing is echoed by other officials and whether it shows up in the account language, since that signals the central bank will not respond to higher long yields with a slower hiking path. Worth watching are upcoming auction results and bid-to-cover behaviour in the larger issuers, plus any revision to issuance guidance, which is where the supply story gets tested.